[OPE-L:2206] Re: Re: Re: Markets and Information

["Duncan K. Foley" <foleyd@xxxxxxxxxxxxxxxxxx>]

Allin's example of Open Source Software speaks to the Hayekian point. Are
we confident that it can be the model for running a whole complex economy?
The contributors to open source software have other day jobs.

While capitalism tended to emerge spontaneously as a practice under the
feudal mode of production, socialism tends to emerge spontaneously as an
ideology under the capitalist mode of production.

Duncan


>On Fri, 14 Jan 2000, Duncan K. Foley wrote:
>
>> [Hayek] views the market as a device that does two things:
>>
>> 1. It induces people to reveal at least some of this
>> information, which he thinks they otherwise would be
>> reluctant or unwilling to do. The market willy-nilly forces
>> people to take positions (or risks) that reveal some of
>> their information.
>
>Suppose I come up with an invention that permits the production
>of some item using less than the going amount of social labour
>time.  If I'm operating in a market system I have an incentive
>to utilize that invention, undersell the competition and make a
>super-profit.  My investment in the new technique reveals to
>others _that_ I have a new method, but it does not reveal what
>that method is, how it works.  I may patent the new method and
>keep it a secret for as long as possible.  Contrast this with
>the communist procedure that we see with Open Source software
>these days.  A new invention is made; the inventor has the
>incentive of kudos and the esteem of his peers to reveal what
>he's done, and the further incentive that by opening up the
>invention he's likely to get help with advancing it faster than
>otherwise.
>
>The implied contrast with the view you ascribe to Hayek seems to
>be that people in a non-market system would just sit on their
>information, not revealing it for fear that they would get no
>reward and would just have their plan quota raised.  That seems
>a bleak -- and, happily, unrealistic -- picture of human
>behavior, given a modicum of cooperative culture and interest in
>one's work.
>
>> 2. The market roughly integrates these disparate pieces of
>> information and thus makes social production possible.
>
>True, but here Paul's technical points kick in.  There's reason
>to believe that a planned system using the right methods could
>do better than the market's "rough", slow, ex post integration.
>I believe (but then I would!) that the burden is now on those
>who maintain Hayek's position, to show just what it is that only
>the market is able to achieve.
>
>Allin Cottrell.

Duncan K. Foley
Department of Economics
Graduate Faculty
New School University
65 Fifth Avenue
New York, NY 10003
(212)-229-5906
messages: (212)-229-5717
fax: (212)-229-5724
e-mail: foleyd@xxxxxxxxxxxxxxxxxx
alternate: foleyd@xxxxxxxxxxxxx
webpage: http://cepa.newschool.edu/~foleyd